- Theodora Oringher Obtains $26 Million Settlement For Its Client County of Orange Against Tata Consultancy Services
Theodora Oringher Obtains $26 Million Settlement For Its Client County of Orange Against Tata Consultancy Services08/24/2016
Theodora Oringher PC has secured a $26 million settlement for its client County of Orange in a lawsuit filed by the firm against global IT services provider Tata Consultancy Services Ltd. and its U.S. affiliate, Tata America International Corporation.
The lawsuit, filed in the United States District Court for the Central District of California, was settled on the eve of a four week jury trial with Tata paying Orange County $26 million in exchange for dismissal of the County’s fraud and breach of contract complaint against the Tata companies. Tata will also dismiss its counterclaim against the County. Neither party admitted liability.
The settlement is the largest amount recovered by Orange County in any lawsuit in eighteen years, dating back to the fallout from the County’s 1994 bankruptcy.
The County selected Tata in 2008 to develop a state of the art property tax management system to replace the aging mainframe system that three County departments (the Auditor – Controller, Treasurer – Tax Collector and Clerk of the Board) had been using since the 1980s. Tata’s July 2008 contract with the County called for Tata to complete the complex software development project by June 2010 for $8 million. The County alleged that Tata took a two year, $8 million contract and tried to stretch it into a six year, $17 million contract through a series of misrepresentations to County staff and to the Board of Supervisors regarding the status of progress of the project.
The County terminated the unfinished project in January 2013 and sued Tata for breach of contract and common law fraud. Given the fraud allegations, the County embarked on an aggressive discovery plan across two continents. Following discovery, the County amended its complaint to add claims for violation of the California False Claims Act, Cal. Gov’t Code section 12650 et seq.
Had the County prevailed only on its breach of contract claim, its damages would have been limited to $4.9 million in progress payments made to Tata during the course of the project, due to a damages limitation provision in the contract. No attorneys’ fees were available to the prevailing party under the contract. Faced with the prospect of a jury trial that included the County’s fraud claims, Tata agreed to settle for $26 million – more than five times what the County could have recovered on its breach of contract claims alone. The settlement was reached during a mediation session held in late July and presided over by Magistrate Judge Jay C. Gandhi and John B. Bates, Jr. of JAMS, who had served as mediator in the lawsuit since just after its inception.
Orange County Supervisor Shawn Nelson said, “We wanted to hire a law firm that would give us the upper hand in trial, and which is respected by the judiciary. We selected Theodora Oringher based on their well known reputation for winning jury trials. We know that their track record for success, and outstanding case preparation, served as the basis for securing this $26 million settlement at the outset of trial.”
“We were honored to have been selected by the Orange County Board of Supervisors to represent the County in this important litigation matter,” said lead trial counsel Todd C. Theodora, who is the firm’s Chairman and CEO. “Vendors who do business with governmental entities need to recognize that they are being paid with public funds, and should be especially careful to honor the public trust when performing their contracts. We are gratified to have been able to help the County secure such a meaningful settlement to recover its losses on this project.”
During the course of the litigation, the County prevailed in a precedent-setting decision by the Ninth Circuit Court of Appeals which confirmed that pre-dispute contractual jury trial waiver provisions, held unenforceable by the California Supreme Court in 2005, are similarly not enforceable when the litigation is filed in a federal court in California. See In re County of Orange, 784 F. 3d 520 (9th Cir. 2016), cert. denied 136 S. Ct. 808 (2016).
Mr. Theodora was assisted in this matter by Allan L. Schare and Timothy J. Gorry, Senior Attorneys at the firm, and attorneys Jon-Jameson Hill, Andrew G. Prout, Brian J. Headman, Stephanie Pittaluga, Alex G. Brizolis and the late Benjamin P. Broderick, as well as paralegals Gabriella Burkhalter and Paul Sorce, together with support staff from the firm’s Orange County and Los Angeles offices.